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Frarkies wil not accept this project because ts lRA isstout a80%. Frankies will

ID: 2647644 • Letter: F

Question

Frarkies wil not accept this project because ts lRA isstout a80%. Frankies will accept this project because h RR, Frankies wil rot accept this project ben Frarkies wil accept this pro- tout 2854% g tal QUESTION 5 1 paints Save Aw FrariiesLLC. is thinking about proiect at has an initial aneHax outlay of S1 50,000. The relevart ture cash mows hon, its tur year proef for yen trough 4 are: S80,000, $70,000, $75,000 and $70 000.Frankies wants to base their decision using the net present value method and has a discount rate of 12%. Wu Frakies accept the poem Frankies rejects the project because the NPV is about-$2.375.60 Frankies rejects the project because the NPV s about-522 375.73. Frankies repetsto proact because the NPV isabout-$12.37510. O Franikes accepts the project because the NPV is greater then 10,000.00 QUESTION 6 r points High-Top, Inc. is considerng a four-year project hat has an initial ater tax outlay cost of $120,000. The tuture cash intiows trom ts proect are $30,000 $35.000 and 532,000 tor years 1,2, 3 and 4, respectively Higp Top uses the ne prsent vle method and hasa company accept the projpet? High- Top accepts the project becaune the NPV s geator tha o8.000 O High-Top rejpects the project because the NPV t-28.000 Hig-Top rejacts the project because the NPV Is $1.021 MacBook Pro 3 W E command option command

Explanation / Answer

5)                                                                                                                                                       

NPV    =-150000+60000/1.12+70000/1.12^2+75000/1.12^3+70000/1.12^4       

NPV    =57244.78                                                                          

                                                                                               

Accept the project since it has positive NPV                                      

                                                                                               

Answer : d) Frankies Accepts the project because NPV is greater than $ 10000     

                                                                                               

                                                                                               

6)                                                                                                                                                       

NPV    =-120000+25000/1.12+30000/1.12^2+35000/1.12^3+32000/1.12^4       

NPV    =-28513.9                                                                           

                                                                                               

Reject the project since it has Negative NPV                                    

                                                                                               

Answer : B) High top inc reject the project because NPV is greater than $ -28000   

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